Investment Highlights

• We maintain our FY19-21F net profit forecasts at RM10.1mil, RM10.3mil and RM10.4mil respectively. We are keeping our HOLD recommendation with an unchanged FV of RM1.85 (Exhibit 2).

• Enra registered a 1QFY19 net profit of RM1.2mil (+17.9% YoY) mainly due to a higher contribution from the energy services division.

• Despite making up only 12% of our full-year forecast, we reckon this to be in line with expectations as we expect stronger earnings in coming quarters with bigger contributions from its energy division and revenue recognition of its property development in London. The property development division recorded the sale of 1 unit of Shamelin Star during the quarter with the revenue to be recognised in 2QFY19. Sales & purchase agreements for two units of Shamelin Star will be signed soon while 5 bookings have been made. This leaves 8 units still available as of August 2018.

• The development of 93 Great Titchfield Street, London (75% stake, GDV of £11mil) is expected to be completed by September 2018 and so far it has received booking for two units. This project will contribute positively to the bottom line as costs have mostly been incurred. Meanwhile, the company will continue its efforts to sell the remaining 8 residential units of Shamelin Star to realise profits.

• Meanwhile, Enra is exploring several property development opportunities in the Klang Valley, focusing mainly on landed residential in the price range of RM500K to RM600K per unit.

• The engineering, construction & fabrication division has completed a major project and is actively seeking to win jobs in various industries. At present, its tender book stands at approximately RM1.0bil.

• Enra's forward earnings will be driven largely by: (1) its US$48mil (RM210mil) 4-year contract for the provision of condensate storing and offloading services for the Yetagun offshore gas filed off the coast of Myanmar; and (2) sales from its remaining 8 units in Shamelin Star and its one-off property project in London. Meanwhile the proposed land reclamation project in Labuan is still a long way to go and will not have significant contribution to the group’s bottom line over the short to medium term.

Source: AmInvest Research - 14 Aug 2018